Kamala's $50k tax credit for Startups is a joke - most don't even make a profit for the first several years

[Bigdog]

trump has had more in debt forgiveness than his net worth. That means his complete net worth is stolen from lenders and investors.

Post the relevant quote on here and provide your source.

 

[Walt]

When you reinvest profits before the end of the tax year, they are no longer profits ... they are expenses.

It is called a profit. You pay taxes on the profit, and then can reinvest what is left after the taxes. The reinvested profits are then business expenses deductible against future profits.

A business starting out needs as much money as they can get, so it is much better to not have to pay taxes on those original profits.

They amortize so they can spread the deductions out. I repeat, ... they do NOT need the dedutions the first several years.

The only good thing about spreading out deductions, is that it allows you to move into a lower tax bracket in the out years. But when survival is most important, you just want as many deductions up front as possible. This allows you to reinvest as much of the money as possible, and pay no taxes at first.

Gov't never ordered all small businesses to close, and denied small landlords their rent before. So don't try to deflect with "emergencies".

Florida will order small businesses to close for hurricanes all the time. When plagues were more common, small businesses were closed from time to time. There were even emergency curfews during times of trouble. These things happen.

 

[Geeko Sportivo]

You don't need a tax deduction if you aren't making a profit. Which is the typical scenario for the first several years. It's not going to save your business from going bankrupt.

She has provided no details on how it would work.

The House should be able to work this into a Bill that makes this work as a 50K total deduction stretched out for as many years as it can help. It's like 50K in tax breaks in the bank to be used up until it is all spent. If you only need 10k deduction a year, then that is all you use.

I can see this working for new LLC's and Corporations as well as small independent businesses.

This is still much better than just lowering the tax rate for commerce like Trump wants to do WILLY NILLY- that only increases the already too high deficit!

And this would encourage small business owners to incorporate or get their LLC much sooner, and encourage them to hire more workers to promote their business so they can compete.
Competition lowers prices.

 

[Walt]

The House should be able to work this into a Bill that makes this work as a 50K total deduction stretched out for as many years as it can help. It's like 50K in tax breaks in the bank to be used up until it is all spent. If you only need 10k deduction a year, then that is all you use.

I can see this working for new LLC's and Corporations as well as small independent businesses.

This is still much better than just lowering the tax rate for commerce like Trump wants to do WILLY NILLY- that only increases the already too high deficit!

And this would encourage small business owners to incorporate or get their LLC much sooner, and encourage them to hire more workers to promote their business so they can compete.
Competition lowers prices.

It encourages new businesses to start, which is big. It is great, in a way trump's tax cuts for the very rich just is not.

 

[Poor Richard Saunders]

You talk about profits, ... when many beginning owners can't eve afford to pay themselves the first year.

Except you don't quite know how profits work compared to cash available.
If a business owner takes out a business loan, the principle payments to the bank count as profit for tax purposes.

If a business owner takes out a $500,000 loan payable over 6 years at 6%, making the payments to the bank means they will have a profit of about $71,000 that first year that all goes to the bank. The business owner can not have any money to pay himself and still have a taxable profit of $71,000 under this common scenario.

The equipment they bought with the $500,000 under the tax law is amortized over 10 or 15 years so the cost of the equipment can't wipe out the profit that goes to the bank. The owner has a profit but no cash to pay himself or the taxes he owes.

 

[Poor Richard Saunders]

They amortize so they can spread the deductions out. I repeat, ... they do NOT need the dedutions the first several years.

No. They amortize because the tax law says the expense MUST be amortized or depreciated over a time period set by law.

If amortization wasn't required, they could simply take all the loss in the first year and then roll over the loss to cancel out profits in following years until the loss is no longer there.

At this point you are proving you have never been a business owner and don't know anyone that has ever been a business owner.

 

[Hawkeye10]

Almost certainly most of the money would be spent on fraud.....which might be a feature not a bug.....people will simply get a business license.....which in my state costs $90.....and then collect $50k.

 

[Poor Richard Saunders]

Almost certainly most of the money would be spent on fraud.....which might be a feature not a bug.....people will simply get a business license.....which in my state costs $90.....and then collect $50k.

It's a tax credit. I guess you don't understand the tax law. When you have a tax credit of $50K, you don't collect $50K from the government.

 

[LurchAddams]

Why do white libs know so little about business and job creation.

If you are not making a profit, a tax deduction is useless.


" According to the U.S. Bureau of Labor Statistics (BLS), approximately 20% of new businesses fail during the first two years of being open, 45% during the first five years, and 65% during the first 10 years. Only 25% of new businesses make it to 15 years or more. These statistics haven't changed much over time, and have been fairly consistent since the 1990s."

Top 6 Reasons New Businesses Fail

Running your own business may be the American Dream, but it can be difficult for many entrepreneurs. Learn how to avoid common factors leading to bankruptcy.

www.investopedia.com

And then some businesses, like trump co. commit fraud and declare bankruptcy 4 times!

 

[Hawkeye10]

It's a tax credit. I guess you don't understand the tax law. When you have a tax credit of $50K, you don't collect $50K from the government.

Getting a discount in your taxes is effectively the same thing as getting a check.

 

[Bigdog]

Except you don't quite know how profits work compared to cash available.
If a business owner takes out a business loan, the principle payments to the bank count as profit for tax purposes.

If a business owner takes out a $500,000 loan payable over 6 years at 6%, making the payments to the bank means they will have a profit of about $71,000 that first year that all goes to the bank. The business owner can not have any money to pay himself and still have a taxable profit of $71,000 under this common scenario.

The equipment they bought with the $500,000 under the tax law is amortized over 10 or 15 years so the cost of the equipment can't wipe out the profit that goes to the bank. The owner has a profit but no cash to pay himself or the taxes he owes.

Business loans are typically amortized with the early payments being mostly interest.

 

[LurchAddams]

You don't need a tax deduction if you aren't making a profit. Which is the typical scenario for the first several years. It's not going to save your business from going bankrupt.

She has provided no details on how it would work.

When asked what trump was going to do about healthcare? He responded, "I have the concept of a plan"!

 

[Bigdog]

No. They amortize because the tax law says the expense MUST be amortized or depreciated over a time period set by law.

If amortization wasn't required, they could simply take all the loss in the first year and then roll over the loss to cancel out profits in following years until the loss is no longer there.

At this point you are proving you have never been a business owner and don't know anyone that has ever been a business owner.

No, it depends on the item. For some depreciable items you can choose between expensing or amortizing.

 

[Althea]

Kamala's $50k tax credit for Startups is a joke - most don't even make a profit for the first several years​

Hence the need for a 50K break on their taxes!

I can see that.

The article says nothing about Harris' 'concept of a plan'. Dog rarely understands the topics he posts about.

 

[Poor Richard Saunders]

Business loans are typically amortized with the early payments being mostly interest.

So now you are showing you don't know how to calculate, interest and principle in a loan payment.
It's an easy formula that can be found in excel and google sheets.
On a $500,000 loan at 6% over 6 years, your first payment is $2500 in interest and $5786.44 in principle. The 12 payment is $2173.67 in interest and $6112.78 on principle. The 72 payment has interest of about $41.

 

[Poor Richard Saunders]

No, it depends on the item. For some depreciable items you can choose between expensing or amortizing.

For some you can, but not for all.

 

[Walt]

Almost certainly most of the money would be spent on fraud.....which might be a feature not a bug.....people will simply get a business license.....which in my state costs $90.....and then collect $50k.

There are very few businesses that can be started with only $90. You do not "collect" the $50k, you can get up to $50k in immediate business expenses(if you can prove $50k in business expenses). The IRS is very good at catching fake business expenses. Remember, they can match business expenses to the other party's business revenue.

 

[Walt]

Business loans are typically amortized with the early payments being mostly interest.

Loans are not amortized. They are paid off over time, but are deducted as they are paid off. If they were amortized, they would be deducted later, which they are not. Dog does not know what amortized means.

 

[Bigdog]

So now you are showing you don't know how to calculate, interest and principle in a loan payment.
It's an easy formula that can be found in excel and google sheets.
On a $500,000 loan at 6% over 6 years, your first payment is $2500 in interest and $5786.44 in principle. The 12 payment is $2173.67 in interest and $6112.78 on principle. The 72 payment has interest of about $41.

Ok, you did amortize. However startup loans are rarely that large, ... more like 50k - 100k.

 

[Bigdog]

For some you can, but not for all.

Correct. The law does not always force you to amortize.